If your debt is past the Statute of Limitations a collection agency or creditor can still sue you in civil court as an attempt to obtain a judgment. So why does the Statute of Limitations (SOL) exist and how can you use it towards your defense? If you have any questions pertaining to this article please leave a comment at the end of this page. See also, Debt Prison related article Sample Debt Validation Letter.
**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.
A statute of limitations (pertaining to debt) is a statute in our legal system that sets forth the maximum period of time, after certain events (default on payments), that legal proceedings based on those events may be initiated. The SOL for defaulted debt will vary state by state which you can look up by clicking here. The SOL can vary wildly… in New York it’s 6 years but in Ohio it’s 15 years (sucks to be in Ohio). The date on which you miss your first payment starts the clock on the SOL. For example, in Texas the SOL for defaulted debts is four years. So if you miss your first payment on August 30, 2008 – your creditor has until August 30, 2012 to file suit and still be within the SOL. So why would a collection agency or creditor file suit on defaulted debt after the SOL has expired?
You need to show up in court to defend yourself
Though the debt may be past the SOL… someone needs to show up in court and explain that to the judge. That someone should be you. So if your debt is past the SOL and you get served a summons for a civil suit from a collection agency – just make sure you walk into court on the assigned day and explain to the judge why the debt is past the SOL. The judge will then dismiss the case. It would be a good idea to take any paperwork into court with you to help support your defense.
If you fail to show up in court and defend yourself the collection agency will likely win a default judgment. So you want to make sure you show up in court to prevent the default judgment. Also, it would be a good idea to converse with the collection agency and try and convince them to drop the suit before the court date. Since their appearing in court and having their case dismissed would be a complete waste of their time…. not to mention yours. Sometimes it’s worth a phone conversation to convince the plaintiff that their case won’t stand up in court and therefore should be dropped.
Can the collection agency still sell my debt to another agency?
Selling debt is becoming a world wide industry. Junk debt buyers are buying up debts on which the SOL has expired and even debt that was absolved due to bankrtupcy. Why would a company buy such debt? Because many people will become intimidated and pay the debt. Most people simply don’t know their rights.
But can’t the clock on the SOL get reset?
Yes…. the clock on the Statute of Limitations can be reset by a couple of different circumstances. First, if you make any payment (no matter how small) on the defaulted debt the clock on the SOL will be reset. So in Texas the collection agency would then have a fresh four years to drag you into court to obtain a judgment. Also, in some states if you acknowledge, over the telephone, that you owe the debt or that you will try and make a payment – the SOL just got reset! So be careful what you say over the phone.
Discuss this article and meet new people at Debt Prison Forums.
Related Articles
* Restrictions on Wage Garnishment for Debt Collection.
* The Fair Debt Collection Practices Act
* Reasons not to file Bankruptcy or Settle Your Debts
* Can you go to jail for not paying your debts?
* How to settle your debts on your own
I have this problem on my credit report a collection agency say i owed them and i called them no
have record and said that another collection has debt and i called the agency they don’t have no
record
I have this problem on my credit report a collection agency say i owed them and i called them no
have record and said that another collection has debt and i called the agency they don’t have no
record but what do I do when the collector named on my report don’t have record
My wife has a debt from 2000, that is when she stopped paying it. They took us to court in 2006 and we didn’t know about it. They won a judgement and are trying to collect money directly from her bank account. They actually did but got the money back after filing an exemption. This is way past the SOL from 2000. what can we do now? I am ready to buy a house that is just starting escrow. Is there a quick way around not paying this? Do I need to go through the courts?
The problem is this:
SOL is an affirmative defense. You have to show up. To show up, you have to know you’ve been sued. It’s in their interest to wait on a disputed item until, with compounded interest, a disputed charge of $135 on an account that you asked to be closed (because you don’t trust them after the phony charge) becomes $1,350 four years after you move, and they “serve” you by mailing something to the “last known address” knowing full well that that means you won’t even know they sued you, so that you “won’t show up,” because the “debt” is a complete fraud and they need you to not be there in order to win. Then the substantive issue is resolved in their favor without being addressed, and then they can automatically attach your wages and have 20 years – - I would not be surprised if they wait for 8-10 years since the judgment rate exceeds CPI, and at that point they have nothing to lose.
With Lexis-Nexis and other tools, there’s no “skipping.” You can find anyone if you want to. They should do away with “last known address” service – it’s what you do when you know you wouldn’t win in court if the case were actually heard on the merits.
sombol.
In my OPINION I would probably get a hold of the people that sent you the demand and ask from them the balance and date of last payment, along with the summary of all payments you made as well. DO NOT say anything else! They might talk you into saying you will make small payments or something which they might record and reset your default date! Once you get the info on the last payment date (make them send proof like a check copy) then find out if the date is past the Statue of Limitations Date. If it is then tell them it is and see what they have to say. remember you have to go to court if they file or they will win the suit by default….if you go, then it should be cleared under SOL if the default time was old enough.
I have a question. I have a debt from 10 years ago from the time I lived in Massachusetts. I currently live in New Hampshire. I have been making small payments for a number of years to a law office. Recently I printed copies of my credit report for all three agencies and I can no longer find the debt anywhere. So I stopped making payments several months ago. I received a letter today saying that if I don’t make a payment they will take me to court. What should I do? Am I really still obligated to pay on a debt that no longer exists on any of my credit reports? Have I reset my SOL and therefore will I lose in court if they chose to actually go through with their threats?
I am taking over my brothers (61) affairs as he has a mental illness, not able to work, not able to care for himself, living with my sister, and now being placed (after two months) in a health care residential facility.
He owes about 40K of which his wife cannot handle. They have all their finances separate so her name is not on his cards and they file separately with IRS. My question is if we just default on credit card debt, can I do anything to show the credit card company that he is in a mental facitily and no one will be paying the debt. Bankruptcy is not an option due to other factors. What can we expect? He has no phone, not at old address, no checking account (all money went to facility). Will they go after him in a year if he has a job and garnish wages?
Kevin…the short answer is YES….doesn’t matter where you live…NEVER speak to these dogs on the phone. They have to tell you who they are before they and their purpose of calling you. At this point just hang-up the phone. If they call again…hang-up again. If you have caller id…don’t answer the phone or ask and see if your phone carrier offers call block feature and use it.
If you like to say anything to these dogs, tell them they can speak to you only thru the U.S. mail and only reply back via certified, return receipt mail (make sure the certified, return receipt number is noted on the letter before mailing it out) as these dogs will forget, deny and/or lie about anything and everything that was said or done.
Hope that clears it up for you.
“Also, in some states if you acknowledge, over the telephone, that you owe the debt or that you will try and make a payment – the SOL just got reset! So be careful what you say over the phone” Would this include New York??